The world price of crude oil rose again on Monday, extending three weeks of gains, on the strength of a brightening forecast for fuel consumption as governments ease travel restrictions, causing commodity supply to tighten.
While Brent crude, Nigeria’s oil standard, rose more than 35 cents, or 0.7 percent, to $73.47 a barrel, the highest level since May 2019, West Texas Intermediate (WTI) rose more than 31 cents, or 0.5 percent, to $71.73 a barrel, the highest level since October 2018.
As anti-coronavirus lockdowns and other restrictions are removed, mass transportation is returning to pre-pandemic levels, and more planes are in the air, driving three weeks of increases in oil benchmarks.
However, rising worldwide oil prices present a conundrum for Nigeria, which is gaining much-needed foreign cash while also anticipating higher import expenses for petroleum items.
Even though crude oil prices were lower in March, the Nigerian National Fuel Corporation (NNPC) stated it was paying roughly N120 billion in petroleum subsidies monthly.
Due to payments to offset subsidy on petroleum imports, the national oil firm has been unable to contribute to the Federal Account Allocation Committee (FAAC) since April.
The NNPC, on the other hand, stated that the payment of subsidies would have no impact on its responsibilities to its partners, while it would be unable to contribute to the account from which states and local governments receive their monthly allotment.
The International Energy Agency (IEA) issued a report over the weekend urging the Organization of Petroleum Exporting Countries (OPEC) and its partners, known as OPEC+, to increase supply to meet recovering demand.
However, after the epidemic wiped off demand in 2020, the OPEC+ group has been restricting production to sustain prices, adhering to agreed-upon targets since May.
“OPEC+ needs to open the taps to keep the world oil markets adequately supplied,” the IEA said.
According to the organization, demand for crude oil and petroleum products will approach pre-COVID levels by 2022, given on current global economic growth estimates.
It did, however, urge for no new investments in oil and gas, claiming that by 2050, it will have achieved net zero emissions.
According to OPEC data, Nigeria’s crude oil production output fell to a historic low in May 2021, which coincides with the current market conditions.
According to the research, Nigeria’s average daily output was 1.410 million barrels per day in the first quarter of 2021, 1.460 million barrels per day in April, and 1.388 barrels per day in May, resulting in a loss of 72,000 barrels per day for the month.
According to secondary sources, the country’s average crude oil production was 1.78 Mbpd in 2019 and 1.57 Mbpd in 2020, while total OPEC 13-member crude oil production averaged 25.46 Mb/d in May.
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